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Regional Transfer Multipliers

Raphael Corbi () and Paolo Surico Elias Papaioannou
Authors registered in the RePEc Author Service: Paolo Surico () and Elias Papaioannou ()

No 2018_12, Working Papers, Department of Economics from University of São Paulo (FEA-USP)

Abstract: A series of discontinuities in the allocation mechanism of federal transfers to municipal governments in Brazil allow us to identify the causal effect of public spending on local labor markets, using a ‘fuzzy’ Regression Discontinuity Design (RDD). Our estimates imply a cost per job of about 8,000 US dollars per year and a local income multiplier around two. The effect comes mostly from employment in the retail, education and services sectors and is more pronounced among smaller municipalities in the North, with lower income and lower bank penetration.

Keywords: natural experiment; ‘fuzzy’ RD; government spending; employment; wages (search for similar items in EconPapers)
JEL-codes: E62 H72 C26 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mac and nep-ure
Date: 2018-07-11
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